0000789281fist:S000009073Member2012-06-262013-06-2500007892812012-06-262013-06-250000789281fist:S000009073Memberfist:C000130424Member2012-06-262013-06-250000789281fist:S000009073Memberfist:StandardAndPoorsFiveHundredIndexMember2012-06-262013-06-250000789281fist:S000009073Memberfist:BlendedIndexMember2012-06-262013-06-250000789281fist:S000009073Memberfist:LipperMixedAssetTargetAllocationMedianClassificationMember2012-06-262013-06-25pureiso4217:USD<div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleShareholderFeesFederatedCapitalIncomeFund column period compact * ~</div><div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleAnnualFundOperatingExpensesFederatedCapitalIncomeFund column period compact * ~</div><div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleAverageAnnualTotalReturnsTransposedFederatedCapitalIncomeFund column period compact * ~</div>false2013-06-25485BPOS2013-06-25FEDERATED INCOME SECURITIES TRUST00007892812013-06-252013-06-25<b>Federated Capital Income Fund (the "Fund")</b><b>RISK/RETURN SUMMARY: INVESTMENT OBJECTIVE</b>The Fund's investment objectives are current income and long-term growth of income.Capital appreciation is a secondary objective.<b>RISK/RETURN SUMMARY: FEES AND EXPENSES</b>This table describes the fees and expenses that you may pay if you buy and hold Class R Shares (R) of the Fund.<b>Example</b>This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.<br/><br/>The Example assumes that you invest $10,000 for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that operating expenses are as shown in the table above and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:<b>Portfolio Turnover</b>The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 37% of the average value of its portfolio.<b>RISK/RETURN SUMMARY: INVESTMENTS, RISKS and PERFORMANCE</b><br/><br/><b>What are the Fund's Main Investment Strategies?</b>The Fund pursues its investment objective by investing in both equity and fixed-income securities that have high relative income potential. The fund's investment adviser's ("Adviser") process for selecting equity investments attempts to identify mature, mid- to large-cap value companies and securities with high dividend yields that are likely to maintain and increase their dividends. The Adviser selects fixed-income investments that offer high current yields. The Adviser expects that these fixed-income investments will primarily be investment-grade debt issues, domestic noninvestment-grade debt securities (also known as "junk bonds" or "high-yield bonds") and foreign investment-grade and noninvestment-grade fixed-income securities, including emerging market debt securities. The Adviser continuously analyzes a variety of economic and market indicators, considers the expected performance and risks unique to these categories of fixed-income investments, and attempts to strategically allocate among the categories to achieve strong income across changing business cycles. The Adviser does not target an average maturity or duration for the Fund's portfolio and may invest in bonds of any maturity range. The Fund may buy or sell foreign currencies in lieu of or in addition to non-dollar denominated fixed-income securities in order to increase or decrease its exposure to foreign interest rate and/or currency markets. <br /><br /> Certain of the government securities in which the Fund invests are not backed by the full faith and credit of the U.S. government, such as those issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Bank System. These entities are, however, supported through federal subsidies, loans or other benefits. The Fund may also invest in government securities that are supported by the full faith and credit of the U.S. government, such as those issued by the Government National Mortgage Association ("Ginnie Mae"). Finally, the Fund may invest in a few government securities that have no explicit financial support, but which are regarded as having implied support because the federal government sponsors their activities. <br /><br /> The Fund may use derivative contracts and/or hybrid instruments to implement elements of its investment strategy as more fully described in the Fund's Prospectus.<b>What are the Main Risks of Investing in the Fund?</b>All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund. The primary factors that may reduce the Fund's returns include: <ul type="square"><li><b>Stock Market Risk.</b> The value of equity securities in the Fund's portfolio will fluctuate and, as a result, the Fund's Share price may decline suddenly or over a sustained period of time. </li></ul><ul type="square"><li><b>Risk Related to Investing for Value.</b> The Fund generally uses a "value" style of investing, so that the Fund's Share price may lag that of other funds using a different investment style. </li></ul><ul type="square"><li><b>Counterparty Credit Risk.</b> Credit risk includes the possibility that a party to a transaction involving the Fund will fail to meet its obligations. This could cause the Fund to lose the benefit of the transaction or prevent the Fund from selling or buying other securities to implement its investment strategy.</li></ul><ul type="square"><li><b>Liquidity Risk.</b> Trading opportunities are more limited for fixed-income securities that have not received any credit ratings, have received ratings below investment grade or are not widely held. Trading opportunities are more limited for CMOs that have complex terms or that are not widely held. These features may make it more difficult to sell or buy a security at a favorable price or time. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash or give up an investment opportunity, any of which could have a negative effect on the Fund's performance. Infrequent trading of securities may also lead to an increase in their price volatility.</li></ul><ul type="square"><li><b>Risk Associated with Noninvestment-Grade Securities.</b> Securities rated below investment grade may be subject to greater interest rate, credit and liquidity risks than investment-grade securities.</li></ul><ul type="square"><li><b>Risk Related to the Economy.</b> Lower grade bond returns are sensitive to changes in the economy. </li></ul><ul type="square"><li><b>Interest Rate Risk.</b> Prices of fixed-income securities generally fall when interest rates rise. </li></ul><ul type="square"><li><b>Prepayment Risk.</b> When homeowners prepay their mortgages in response to lower interest rates, the Fund will be required to reinvest the proceeds at the lower interest rates available. Also, when interest rates fall, the price of mortgage-backed securities may not rise to as great an extent as that of other fixed-income securities.</li></ul><ul type="square"><li><b>Risk of Foreign Investing.</b> Because the Fund may invest in securities issued by foreign companies, the Fund's Share price may be more affected by foreign economic and political conditions, taxation policies and accounting and auditing standards than could otherwise be the case.</li></ul><ul type="square"><li><b>Risk of Investing in ADRs and Domestically Traded Securities of Foreign Issuers.</b> Because the Fund may invest in American Depositary Receipts (ADRs) and other domestically traded securities of foreign companies, the Fund's Share price may be more affected by foreign economic and political conditions, taxation policies and accounting and auditing standards than would otherwise be the case.</li></ul><ul type="square"><li><b>Risk of Investing in Emerging Market Countries.</b> Securities issued or traded in emerging markets generally entail greater risks than securities issued or traded in developed markets. Emerging market countries may have relatively unstable governments and may present the risk of nationalization of businesses, expropriation, confiscatory taxation or, in certain instances, reversion to closed market, centrally planned economics.</li></ul><ul type="square"><li><b>Currency Risk.</b> Exchange rates for currencies fluctuate daily. Accordingly, the Fund may experience increased volatility with respect to the value of its Shares and its returns as a result of its exposure to foreign currencies through direct holding of such currencies or holding of non-U.S. dollar denominated securities.</li></ul><ul type="square"><li><b>Eurozone Related Risk.</b> A number of countries in the European Union (EU) have experienced, and may continue to experience, severe economic and financial difficulties. Additional EU member countries may also fall subject to such difficulties. These events could negatively affect the value and liquidity of the Fund's investments in euro-denominated securities and derivatives contracts, securities of issuers located in the EU or with significant exposure to EU issuers or countries.</li></ul><ul type="square"><li><b>Risk of Investing in Derivative Contracts and Hybrid Instruments.</b> Derivative contracts and hybrid instruments involve risks different from, or possibly greater than, risks associated with investing directly in securities and other traditional investments. Specific risk issues related to the use of such contracts and instruments include valuation and tax issues, increased potential for losses and/or costs to the Fund, and a potential reduction in gains to the Fund. Each of these issues is described in greater detail in this Prospectus. Derivative contracts and hybrid instruments may also involve other risks described in this Prospectus or the Fund's Statement of Additional Information (SAI), such as stock market, interest rate, credit, currency, liquidity and leverage risks.</li></ul><ul type="square"><li><b>Exchange-Traded Funds Risk.</b> An investment in an exchange-traded fund (ETF) generally presents the same primary risks as an investment in a conventional fund (i.e., one that is not exchanged traded) that has the same investment objectives, strategies and policies.</li></ul><ul type="square"><li><b>Sector Risk.</b> Sector risks is the possibility that a certain sector may underperform other sectors or the market as a whole.</li></ul><ul type="square"><li><b>Leverage Risk.</b> Leverage risk is created when an investment, which includes, for example, an investment in a derivative contract, exposes the Fund to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain.</li></ul><ul type="square"><li><b>Custodial Services and Related Investment Costs.</b> Custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. Such markets have settlement and clearance procedures that differ from those in the United States. In certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. The inability of the Fund to make intended securities purchases due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of a portfolio security caused by settlement problems could result in losses to the Fund due to a subsequent decline in value of the portfolio security. In addition, security settlement and clearance procedures in some emerging countries may not fully protect the Fund against loss of its assets.</li></ul><ul type="square"><li><b>Technology Risk.</b> Proprietary and third-party data and systems are utilized to support decision making for the Fund. &nbsp;Data imprecision, software or other technology malfunctions, programming inaccuracies and similar circumstances may impair the performance of these systems, which may negatively affect Fund performance.</li></ul> The Shares offered by this Prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.<b>Performance: Bar Chart and Table <br/><br/>Risk/Return Bar Chart</b>The Fund is the successor to Federated Capital Income Fund, Inc. (the "Predecessor Fund") pursuant to a reorganization that became effective on May 27, 2003. Prior to that date, the Fund had no investment operations. Accordingly, the performance information and financial information provided in this Prospectus for the periods prior to the reorganization is historical information of the Predecessor Fund. The Predecessor Fund was managed by Passport Research Ltd., using the same personnel as the Fund's Adviser and had the same investment objectives, strategies and policies as the Fund.<br/><br/>The bar chart and performance table below reflect historical performance data for the Fund. The Fund's R class will commence operations on or about June 25, 2013. The Fund offers five other classes of shares: Class A Shares, Class B Shares, Class C Shares, Class F Shares and Institutional Shares. For the period prior to the commencement of operations of the Fund's R class, the R class performance information shown below is the Fund's A class performance adjusted to reflect the expenses of the Fund's R class for each year for which the expenses of the Fund's R class would have exceeded the actual expenses paid by the Fund's A class. The performance shown in the table below also has been adjusted to reflect differences between the sales loads and charges imposed on the purchase and redemption of the Fund's A class and R class. The bar chart and performance table below are intended to help you analyze the Fund's investment risks in light of its historical returns. The bar chart shows the variability of the Fund's R class total returns on a calendar year-by-year basis. The Average Annual Total Return Table shows returns for each class averaged over the stated periods, and includes comparative performance information. The Fund's performance will fluctuate, and past performance (before and after taxes) is not necessarily an indication of future results. Updated performance information for the Fund is available under the "Products" section at FederatedInvestors.com or by calling 1-800-341-7400.Federated Capital Income Fund- R Class<b>Average Annual Total Return Table</b>The Fund's R class total return for the three-month period from January 1, 2013 to March 31, 2013, was 4.14%. <br/><br/>Within the periods shown in the bar chart, the Fund's R class highest quarterly return was 12.45% (quarter ended June 30, 2003). Its lowest quarterly return was (13.51)% (quarter ended December 31, 2008).The Fund's R class will commence operations on or about June 25, 2013. For the period prior to the commencement of operations of the R class, the performance information shown below is for the Fund's A class, adjusted as described above.<br/><br/>(For the Period Ended December 31, 2012)000000.0060.0050.00450.00010.01560.0115-0.004115649385018560.19890.0990.06040.15210.0338-0.2170.2810.11320.04640.10970.10970.160.1160.11380.05330.01660.06270.02610.07990.0710.06160.063July 1, 2014up to but not including the later of (the "Termination Date"): (a) July 1, 2014; or (b) the date of the Fund's next effective Prospectus.All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund.The Shares offered by this Prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.The bar chart shows the variability of the Fund's R class total returns on a calendar year-by-year basis.The Fund's R class will commence operations on or about June 25, 2013.The Fund's performance will fluctuate, and past performance (before and after taxes) is not necessarily an indication of future results.1-800-341-7400FederatedInvestors.comhighest quarterly return2003-06-300.1245lowest quarterly return2008-12-31-0.1351The Fund's R class total return for the three-month period2013-03-310.0414<div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleAnnualTotalReturnsFederatedCapitalIncomeFundBarChart column period compact * ~</div>
Shareholder Fees (fees paid directly from your investment)<b>Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)</b><div style="display:none">~ http://www.FederatedInvestors.com/role/ScheduleExpenseExampleFederatedCapitalIncomeFund column period compact * ~</div>
0.37The Adviser and its affiliates have voluntarily agreed to waive their fees and/or reimburse expenses so that total annual fund operating expenses (excluding Acquired Fund Fees and Expenses, Expenses Allocated from Affiliated Partnerships and Tax Reclaim Recovery Expenses) paid by the Fund's R class (after the voluntary waivers and/or reimbursements) will not exceed 1.14% (the "Fee Limit") up to but not including the later of (the "Termination Date"): (a) July 1, 2014; or (b) the date of the Fund's next effective Prospectus. While the Adviser and its affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Fund's Board of Trustees.The Standard and Poor's 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Barclays Capital changed the name of the BEMB, BHY2%ICI and the BMB indexes from "Barclays Capital Emerging Market Bond Index" to "Barclays Emerging Market Bond Index," "Barclays Capital High Yield 2% Issuer Capped Index" to "Barclays High Yield 2% Issuer Capped Index" and "Barclays Capital Mortgage-Backed Securities Index" to "Barclays Mortgage-Backed Securities Index ." Blended Index is a blend of indexes comprised of 40% Dow Jones Select Dividend Index/20% Barclays Emerging Market Bond Index/20% Barclays High Yield 2% Issuer Capped Index/20% Barclays Capital Mortgage-Backed Securities Index. Lipper figures represent the average of the total returns reported by all the mutual funds designated by Lipper, Inc. as falling into the respective category indicated. They do not reflect sales charges.